53 F. 927 -

53 F1d 927

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Case Text

THE RICHARD J. CARNEY.

927

rounded polished edges, as a new article of manufacture!' The patented or "velvet-eyed" catheter, as it is called, has been received with great favor. Thi, statement of the history and nature of the invention shows that it did not consist in a mere change of material. It was not an India-rubber surgical instrument, as distinguished from an inSltrument made of metal or of webbing, but it was an improvement upon an eXisting India-rubber tube, which was valuable, and which the record shows had evaded inventive study and skill. Whatever weakneElS there is in the patent consists in the general language of the claim. It is urged that the edges of the eye of the Nelaton and Jacques tubes. when these edges had been burned or abraded and smoothed, became rounded and polished, and that consequently the broad language of the claim was anticipated. It is true that the claim does not specify the fact that the eye is rounded by having been formed in ll: depression of the tube, and therefore does not minutely point out wherein the novelty of the patented article coll.!!ists. The complainants suggest that the objection could be removed by a disclaimer. In our opinion the claim, read by the sufficient light which the specification already furnishes, does not need a disclaimer, for it would naturally be considered to relate only to an India·rubber tube, the eye of which was formed in a mechanically made indentation or depression in the wall of the tube. The adequate proof of infringement which was given in the complainants' prima facie case was not thereafter overcome. The decree of the circuit court is reversed, and the case is remanded to that court. to the end that a decree may be entered for an accounting and for an injunction, with costs in this and the circuit
court:-

THE RIOHARD J. OARNEY. STOUT v. THE RICHARD J. OARNEY et
No.

at

(Circnlt Oourt of Appeals, seventh Oircuit. January 16, 1893.)
35. 1.

CHATTEL MORTGAGES-BONA FIDE PURCHASER-NoTICE-BuRDEN OF PROOF

On a question as to whether the purchaser of a vessel took the same with· out notice of a prior unrecorded chattel mortgage, the fact that the mortgagee failed to record his mortgage places the burden of proof upon him.
On a question as to whether libelant, in buying a vessel, took the same as a bona fide purchaser wfthout notice of a prior unrecorded chattel mortgage given by his vendor, it appeared that libelant and his vendor had offices together; that libelant was present when his vendor purchased the vessel and gave the mortgage in question to secure a balance of purchase money; and the mortgagee testified that libelant then had knowledge of the whole transaction. It further appeared that libelant took the vessel In consideration of a pre-existing indebtedness, only three days before his vendor made an assignment, and did not his bills of sale until the day thereafter; that some time afterwards the mortgagee took possession of the vessel; that he subsequently met libelant, who expressed no surprise at the existence of his claim, and an arrangement was then entered into between them whereby libelant paid a large amount of insurance upon

2.

SAME-EVIDENCE.

I'E.DUAL REPoRTEB. vol. 53.
benefit of the mortgagee, and 8Jso first of ,(h&,110tes secpred by the mortgage, whereupon the',mortgageesWlrendered possession of the vessel; that the mortgagor alway. reUlJJled the manageme,nt, l;b,e, vessel, together, with . ,vessel. at the same time and 'ilildet: the same circumStances, and aIsopurchased by libelant , beforettheassighment; that thlsother vessel was sold under the mortgage, and the $U1'pltJsproceeds tul'l1ed over to lhe mortgagor; and not to libelant; tha,tprlor to thIs time an attempt ,was ma,de to sell, the vessel to thll'd parties, the latter testified ,that told j:hem of the exIstence of'tl:1e mortgage, and that they were only' to 'pay him the value of the vesseUn excess thereof. Held., upon these facts, and upon all the evi· dence, that libelant was not a'bona fide purchaser,and that the mortgage was entitled topriorltr over llla.c1alm.

Appeal from the Circuit COurt of the United states for the Northern District of Dlinois. ' In Admiralty. Libel by James C. Stout against the schooner Richard J. Carney and against James Davidson, mortgagee thereof, to recover possessiqn. In the district court a decree was rendered in favQf of the libelant, but on appeal by defendant Davidson to the circuit court this decree was reversed. Libelant thereupon appealed to this coUrt. Affirmed. Robert Rae, for appellant, O. Stout. John C. Richberg, for appellee, James Dayidson. ,Before WOODS, Circuit Judge, and JENKINS and BUNN, District Judges. BUNN, Distriet Judge. This is a libel in admiralty for possession. The libelant, James C. Stout, claims to be the owner of the $chooner Richard J. Carney by purchase from John A.Maxwell, of St. Paul, on the 20th of Odohel', 1887. The schooner was enrolled at the port of St. Paul, that being her home port. The respondent James Davidson, who is a owner and builder residing at Bay City, Mich., and who had possession under a mortgage at the time the schooner was libeled, claims as mortgagee under said mortgage given him by Maxwell on a sale of the schooner by Davidson to :Maxwell on April 16, 1887, to secure a portion of the purchase price. This mortgage was not recorded until November 10, 1887, and after the sale of the vessel to ,the .libelant. After the seizure of. the schooner in this case, she was libeled and sold for seamen's wages for the sum of $4,300, and the proceeds paid into court. Davidson, as mortgagee, then intervened, as against the balance of. the proceeds after the payment of seamen's wages, and also in this case appears .and answel'S the libel claiming the balance of the proceeds. So that the only question in the case is as to who is entitled to the money arising from the sale, as between the libelant, claiming as purchaser from Maxwell, and Davidson, claiming under an unrecorded prior mortgage for the purchase money on a sale to Maxwell. The only ist:lue in this case is one of fact. Did Stout have actual notice of the $7,250 notes and mortgage given by Rood & Maxwell on April 16, 1887, to James Davidson on the boat Carney, to secure the balance of purchase price on sale of the boat? The price of boat was ,9,750,-$2,500 paid down, and the balance secured by

':THE

RICHARD 3: CARNEY.

929'

mortgage on the Carney. In order to determinedthe fact, recourse must be had to all the eVidence and circumstances. There was a good deal of intercourse between the parties, and the entire transactions as shown, as well by the documentary evidence and eon.duct of the parties at the time as their oral statements under oath given since the dispute arose, are to be fully considered. The burden is upon the mortgagee, inasmuch as he failed to record his mortgage, to show that Stout, at the time he purchased, had notice of his mortgage, and therefore purchased subject. to it. Davidson says Stout, as well as Maxwell, was in Chicago at the hotel at the time of the sale of the vessel from Davidson to Maxwell,and knew all about it.· Stout admits being there, and that he knew of the sale, but denies that he knew about the mortgage being given back to secure purchase money. The evidence of the parties being in direct conflict, it becomes essential to look into the record of the entire deal, and all the circumstances, to see who is best corroborated upon the one issue. In looking into the record evidence, it seems to me beyond question, taking all the testimony together, that Stout was not by any means a bona fide purchaser, but that, on the contrary, he bought subject to, and with full knowledge of, Davidson's mortgage. He officed with Maxwell at St. Paul, and from the evidence it is· quite clear he was acting rather as Maxwell's friend and confidant than as a purchaser of the vessel in good faith to pay a pre-existing debt. If the purchase was a bona fide one, for a debt already existing for advance of money, it seems rather strange no evidence was introduced of the acceptances·· taken up by Stout for Maxwell. The chooks given might be for that, or for anything else. It is true Stout' had the undoubted right to rest this part of his case upon his and Maxwell's testimony; but it certainly would have been more satisfactory if further proof had been offered upon this point. But supposing Stout to be a bona fide purchaser, and that he took the veSsel in payment and discharge of pre-existing debts due him from Maxwell, I am satisfied from all the testimony, and especially from the record and documentary proofs and from the conduct of both parties, that Stout took with notice of the unrecorded mortgage of Davidson, and subject to it. It seems clear from all the circumstances that Maxwell did not deceive Stout in the sale, but, on the contrary, that they acted together, and that whatever Maxwell knew, Stout knew. The evidence is strong that the sale'was oIlly colorable; that Maxwell, being already insolvent and in a failing condition, Stout stepped in as a friend and confidant to help him out. Maxwell knew on October 22, 1887, that his property was to be attached by his creditors at St. Paul. October 24th, at Bayfield, he made an assignment. Stout claims that he bought the two boats on October 20th, to pay an existent indebtedness. But he did not record his bills of sale until the 25th. Why not, uIlless there was some hope that Maxwell might pull through? Ifa bona fide sale, why not record them on the 20th? If his purpose had been to secure to himself a bona fide debt, without any thought as to whether the recording of the bills of sale would embarrass Maxwell in fixing up v ..53F.no.9-59

FEDERAL

vol. 5&.

with<hill,cnmtors:, itill:ditllcult to see why he should not have recorded them.'ion,the i 20th. He:.heard, about 50'clocklon:the 24th, of MaxweU,'s;anignment at Ba;yfteld, and on the nextday;recorded his bills much doubt, that Stout's conduct at St."Paul,m I-:November, :1887, when: Davidson and Bruce met him there, after Da'rldsoil 'had taken !possession of the Garney under the mortgage;iili quite inconsistent with the idea of.his being a bona fide purohaser,!of,the'boat,without notice of the mortgage. Indeed,the condl'1({t 'of' ibeth 'parties"/tnd of Maxwell On ,this. occasion is very impolltant iaDti instrUctive, and is just such as we· might expect. it to be if,:StdiIt'ih:ad full,lmowledgeall 'the time 0f Davidson's mortgage. Stout malMl trlQi .claim. on that oecasionof anything to the contrary, and:expreseesil;lO'surpriseat learning the fact that Davidson had so laJ.'geacIaim:on1lheveaselralmostequal to its full value.. According to the:testim:ony of Bwce; everytliing. was amicably and satisfactorily arranged,iRlnd ,it 'is' quite· evident that it was arranged on the basis of Davidson having this mortgage as a lien on the boat.. "\\'11y else should'. pay ,the, '676 insurance money. for. the benefit of the n;lOrtgagoopabiHndorse 1lhe' firstmoIltgage note of $1,250? Why else [email protected] i D8Jvid,SOD; possessi(m \of the vessel, give up possession to Stout and .the freight upon Stout's indorsing one (jf ,the mortgage. notes, and paying the insurance for the benefitofltJiermortgagee? Such,faets speak louder than mere words under oath, long. after the transaction, and after a spoken,' oontrolVeJ:ISyhas arisell.inregard to the proceeds of the sale of the ,; i(f . !bought without notice of Maxwell's claim, there was no'occasion,rfor his either indorsing.any of the notes or paying any insaranee Davidson. ,. He woulll hllive said: '
," ''No. TI:lJs< vel'lsel is' mine. I bought it· without knowledge of your unre(lOrded I cannot indorse or pay any of your notell, and what lnsur!WC, 1 pay ",W to, protect Qwn

If.hebonght subject to the mortgage, he was still under no obliga· tdMls ,to" 'beCome .personally liable 'on :.Maxwell's notes to Davidson, to, get'insuranee orlDavidson's interest for Davidson's benefit; but it is evident such were the fact, it would constitute a sllftlcientimdtieement for Stout to gain possession of the boat by indorsingonE! of· the Iiotes and paying the insurance money. But upon the OOntrlll'Y' hypothesiS,......that· he was lli. bOM fide purchaser without notlioo of' Davi.dson's' claim,-it ,is difficult to account either for his conftl1ct·in: .. uulOrsing' ;the .note ,and paying the insurance, or for Da.ndson'sioondudt jni,giving up ,possession of the vessel. On that njpothesijj the i conduct O,f Davidson, who, it seems, is a man of busiand freight to Stout, is wholly un3:Cconntable., any,weh ciroumstances, Davidson would have lSb.id:i n
"lhaT4Nfhe.. under mymol'tgage, which takes nearly or quite ,the entire in1;erellt in the boat. Ifyou'dlsp'O.te my, title toreceiv.e this money, now ,tb,e pl,ace to try this question. I wj]1 proll8ed to foreclose."

writing to pay, and' afterWards, dl>eS pay, one of fue' 'mortgage' notes: ;Davidson says he promised orally to pay the others as they fell due.' This Stout denies. Butna cannot dispute the record and documentary proofs, so far as they go: He cannot deny 'that he paid the in· surance money.for the oftha mortgagee, o'rthat he indorsed: and actually paId the mortgage note of $1,250 first to fall due.' I Then it is in evidence that, though Stout pllrChased both thfJSe boats, the Cartiey and the Oneida, Maxwell retained the control and' management (Bruce says, under a power of attorney from Stout) un-' til they were sold under the mortgage; and when the Oneida was ' finally disposed of, and it appeared there was an equity remaining above the mortgage and other claims of $2,300, the' evidence shows that was paid to Maxwell. There was a balance of $2,500 belonging to the owner of the equity in that boat, and the evidence shows that' Bruce was paid $200 out of that for his commission on the sale,and' the note for the remaining $2,300 was handed to Maxwell. The note was made by the purchasers, R. :N. Bump, Mr. Bradley, andJ. Davidson, Jr., to the order of J. C. Rykert,and by him indorsed and given to Maxwell, though Maxwell and Stout were both ", present. This circUlllBtance seems quite signifiCant. If Stout was the, real owner, it would seem that the equity above the claims against the boat should have gone to him. Maxwell afterwards sold the Moo, and got the money. ' There is enough in the case, without the subsequent testimony of the two O'Days, to satisfy the court; but their testimony, and the notes and mortgages introduced in connection therewith, go to corio firm the previous case in favor of Davidson and against Stout. This testimony was taken on January 2, 1891, on the hearing in the circuit court, on an appeal from the judgment of the district court. Patrick O'Day testifies that he had negotiations with Maxwell'in 1887 and 1888, in regard to purchasing the barge Carney and the propeller Oneida; that, while at Chicago, Maxwell telegraphed to Stout to cOme there, and Stout came; that was the first time he had ever seen Stout. That on May 9, 1888, he purchased both these boats. That he was to give Stout $1,500 for his interest in the CarneY,and that was all he (Stout) owned in her; that Stout stated that there was an incumbrance on her of $4,500, due to James Davidson, and that, for Stout's title to the vessel, Stout wanted $1,500; that this $1,500 was to be secured by three notes of $500 each, and a mortgage on the Carney. These three notes and the mortgage were produced in evidence, and tally with O'Day's statement. The notes bear date May 9, 1888, and are signed by the two O'Days. O'Day testifies, that they are all, as well as the mortgage, in Stout's handwriting, and that Stout wrote them; that they were made out in Chicago, at the Grace Hotel. He says that, after the notes Itnd mortgage were made out, Maxwell went' with him to Buffalo to. see some propert;y the O'Days were to give as security for the boat Oneida. O'Day says Maxwell told him he was acting in his own interesl;; that Stout his friend, and wanted to help him out. Patrick O'Day is corrobo· rated in all his statements by his son P. J. They both testify that, before the papers were passed,' Patrick O'Day telegraphed to

J'ED;ERAL.REPORTER,

val 53.

could have an extension of time on the .and. that pavidson telegraphed back that he had to ..bia!Jmoney, and .that, when they saw that they I'.ould not1ihe trade. The credit of the O'Days is atfrom which it appears they'are not altogether what they shomd be; but in th!S it would seem they are pretty strongly;; npt,· qnly by the. notes and mortgage made with·thltt sale, or attempted sale, but by the conStout all thew;ay through, and by the testiBruce that,."ifthe two boats had been sold wQuld have got five or six thousand dollars,dollars eaay;?> Itnd this corroborates $e testimony of the. Q1PaJs that Stout to get $1,500 out of the Carney, being tAe:Y9J,l;le IQf his equity oyer the Davidson mortgage, and $4,000 for making for his interest in the two boats. The QWqumi:ltal,lceS in. the conduct to the same conclusion,-tha,t acting. together, and that Stout's purchase WM full know:ledge Of mortgage. The effort 1;0 save somljlthh;lg out.of these two boats over Stnd above the Ji(ij;llil agajust them. is nothip.g in the record to show that S;WJntev;er innocent pllrchaser without notice until wade with the O'Days feU through, and after Davidson had foreclosed his mortgage, in June, 1888. Then 1q, 1888, repudiated the Davidson mortgagef,/J.oJ t,lot, binding on .;Piln, . and then Maxwell comes in and cllt:b:P.%: fur' the .first tiIpe, that he' has deceived Stout. Stout was a.nd and II\,ight very well have been de1 mwili out of llit'!., but MJ.e circumstances and,eyiPftnce,shqw not deceived. Even after :Davidson steps todefend his interests. letter to Dav.idson, at request, asJripgJ!)a;:ijdsonto. extend.i .thetjme on the, mortgage. No doubt, if to extend the time, anp. given Maxwell subject to D::l,vidson's mortgage, the Glaim, .BQQu:after pntfortlJ" .tha;t Stou.t had purchased without notice, would postponed; but wllen Davidson would not extend, ,but upon.: foreclosing, thie claim was put forward. w;Q.en:Qlitvililson, -·on J;Wle 9th, WQkpossession, Stout does nothing, acts 'in respects as the owner, and writes a coa.xingand1tlu'eatening letter to Davidson. He then puts forth the that,llnless Davidson will the boat, Stout will replevy, but/that, if Davidson would do as Maxwell wanted him to do, he all his money. He says: "Don't jump on me because 1 aJ;IldoW\IlJ I have always treated you fairly, and I want you to I think, on the whole, that the record evidence,and the conductor the parties all the way through, fully corroborate the testimonYlof Davidson that Stout knew all about the transaction of the sale. 01 the boats and the taking a mortgage back, and that he purchased with such knowledge, further, that his purchase of the Carney"wasbut colorable, and not made in good faith. The finding and decree of the circuit court are affirmed. I

Fire broke out on a lighter loaded with cotton and lumber, and lying on the New Jersey side of the North river. Signals for assistance being given, a tug took the lighter from the wharf into the stream, where five tugs pumped water on her. By the time of the arrival of the city fire boat, the fire had been brought under control by the tugs. The lighter was afterwards towed by some of the tugs to the Erie basin, and the cargo discharged. The loss on the cotton was about $5,000; the value of the wholl'! cargo, abcut $12,500, and of the barge, $2,500. Th:} tugs were in attendance on the barge for two or three hour;;. Held, that $2,000 should be awarded for the whole service. Where a considerable salvage ser/ice has been rendered, the owner of the salved property cannot arbitrarily require it to be taken to a place designated by him, without reference to the convenience or security of the salvors in the enforcement of their claims. Hence, where tugs took a cotton vessel, on fire, out of the jurisdiction of New into the waters of the state of Ntw Yol'1{, and there rendered ::;alvage services, and the in::;ut'ers of the cotton were also in New York, and the salved property was taken to ]<}rie basin, as is customary with such cargoes, and which Is a proper place, held, that the fact that the tug;;, when halt way to Erie basin, refus(>(]. to obey the order of the owner of the burning vessel to take her back to New Jersey, would not affect the recovery of salvage.

2.

SAME-RIGHT OF OWNER TO DIRECT WHERE PROPERTY TO :BE TAKEN.

In Admiralty. Libel by Leah Seville and others, owners of the tug Ellen, against the barge Georgia, for salvage. The owners of other tugs assisting in the service intervene by petition. Decree for libelants and interveners.

Goodrich, Deady & Goodrich, for the Ellen and the Howard. Wing, Shoudy & Putnam, for the Golden Rod and the Johnson Brothers. McCarty & Berier, for the Daylight and the McCarty. Hoadly, Lauterbach & Johnson, for the Georgia. BROWN, District Judge. The above libel was filed to recover for salvage services rendered by the libelants' steam tug Ellen to barge Georgia, on which a fire broke out a little after 8 A. M. of J nne 18, 1892, in some bales of compressed cotton piled some six tiers high upon her deck. On the after part of her deck were 25,000 feet of lumber. The following tugs were admitted by petition to represent their interests as joint salvers: The tug Johnson Brothers, the Golden Rod, the Howard, the Daylight and the tug J. & J. McCarty. The Georgia was unloading her cotton upon the steamship America, alongside and outside of which she was lying, on the south side of pier - - - , at Hoboken. Two streams of water were directed upon her from the America, but they were found insufficient, and the 8Ul